Sector movers: Industrial miners hit as metal prices fall on Chinese woes

Data from China showing that factory output declined pressured London's industrial metals and mining sector lower on Tuesday as commodity prices fell.

Miners such as Zanaga Iron Ore, URU Metals, Evraz, Ferrex, First Quantum Minerals and Ferrexpo were all trading with losses in afternoon trade.

HSBC’s China manufacturing purchasing managers’ index declined from the break-even point of 50 in November to 49.5 in December. This was the lowest level for the index since April 2014 and came in worse than the consensus forecast of 49.8.

Export orders improved slightly but the new orders sub-index dropped below 50, meaning that "the weakness in December was driven primarily by weaker domestic demand", according to analysts at Danske Bank.

Metal prices weakened after the data on concerns about demand from China, the largest consumer of metals in the world.

The price of nickel was down 2.7% at $16,262.50 a metric tonne by the afternoon, having fallen as low as $16,070 earlier on, its lowest since 1 December. Lead dropped to a 19-month low of $1,944.75 a metric tonne, while copper, zinc, aluminium and tin also declined.

Analyst Jian Chang from Barclays said that growth risks for the Chinese economy "remain on the downside" following Tuesday's data.

The bank is forecasting gross domestic product (GDP) growth of 7.2% in the fourth quarter, implying a slowdown from the 7.3% expansion in the third quarter and the 7.5% increase in the first. Chang also said that her estimate for 7% GDP growth in 2015 is also now uncertain.

Despite the recent rate cut from the People's Bank of China, Chang said: "Given China’s structural challenges, we continue to believe more rate cuts are necessary."

Top performing sectors so far today
Oil Equipment, Services & Distribution 15,648.18 +1.83%
Aerospace and Defence 4,478.39 +1.39%
Electronic & Electrical Equipment 3,845.35 +1.39%
Construction & Materials 3,832.16 +1.36%
General Industrials 3,742.85 +1.19%

Bottom performing sectors so far today
Industrial Metals & Mining 1,140.18 -4.20%
Personal Goods 23,573.63 -1.07%
Food Producers & Processors 7,737.82 -0.93%
Household Goods & Home Construction 11,870.86 -0.69%
Beverages 13,593.69 -0.62%